Sunday, 29 September 2013

Four reasons I won't be backing a 6% council tax rise

A number of Cornwall councillors are asking the authority to consider a 6% council tax rise next year alongside the 1.97% rise that we are currently proposing as part of our budget. Although I think it is right that there should be an open debate about this issue, there are four key reasons why I won't be backing this idea.

First some background. Cornwall Council has to save £23.9 million next year (based on a 1.97% tax rise) in addition to cuts previously made or agreed. This is due to increasing demand for key statutory services such as adult care, an additional 1% cut imposed by the government and a pay award (of 1%) agreed nationally for our staff.

The proposers of the motion are seeking to require the cabinet to put forward an option for a 6% rise alongside our current proposal. Here's why I think this is wrong:

1. People cannot afford to pay
Although the economy is showing some signs of recovery, we are still a long way off the position we were in before the banking crisis. Most people have seen their pay frozen or have received only tiny rises in recent years. And we have seen for ourselves that many people are already finding it very difficult to pay their council tax. This includes the 19,000 or so households who were previously judged to be so poor that they got 100% council tax relief. They now have to pay at least 25% of the bills and many of them cannot. Thousands of people (not all from those paying for the first time) are facing court action because they have not paid. I think it is wrong to seek to impose a tax rise above inflation on Cornwall. It will result in increased hardship and lead to more people being dragged into the court process.

2. It will require a costly referendum
The government requires that any proposal for a council tax rise above 2% must be approved by the people of Cornwall in a referendum held in May (after the new budget has come into effect). I simply do not believe that such a referendum is winnable. Added to which, the referendum must be paid for out of our budget and it would cost about £920,000. That's almost a million which would, in my view, be better spent on front-line services. And if the referendum is lost then the council will be forced into emergency cuts and to re-bill everyone at a cost of more than £100,000.

3. It will waste time and money
The proposers of this motion will argue that all they are asking for is for an alternative to be provided alongside our recommendation. But lots of officer time will be spent working up such a proposal and the measures proposed by the cabinet if we have to provide such an alternative will almost certainly not be the ones which those who favour this course would prefer. So it will need to be amended again with lots more officer time involved. The option to bring forward an alternative budget (at 6% or, indeed, any other figure) will always be there for those who support such a move. So why waste time and money preparing a straw man budget that nobody will agree with?

4. It will misleadAlthough those who are advocating this course understand this well enough, I believe most people who are not well versed in local government finance will think that a referendum and an increase above inflation will mean there will be few or no cuts if it goes through. But whilst a high council tax rise would mean less savings would be needed, the truth is that instead of the £23.9 million of savings needed by a 1.97% rise, we would still need to make about £16 million of cuts once the costs of the referendum are accounted for. In my view, the logical alternative would be to put forward an option of a council tax rise which would require no cuts at all. But that would be a rise of about 19% or £240 on a band D council tax bill and I think that has even less chance of winning referendum approval.

I respect the motives of those who are putting forward this motion and think it is good to debate such issues. But I, for one, will not be voting for it.

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